consumption Flashcards
consumption
total expenditure by households on goods and services over a period of time
durable goods
goods consumed over a long period of time
non-durable goods
goods consumed almost immediately
saving
portion of households’ disposable income which isn’t spent over a period of time
disposable income
household income over a period of time
includes state benefits + less direct taxes
consumption function
relationship between consumption of households and the factors that determine it
marginal propensity to consume (MPS)
proportion of a change in income that is spent
MPC equation
change in C / change in Y
average propensity to consume (APS)
proportion of total income spent
APS equation
C/Y
wealth effect
change in consumption following a change in wealth
savings function
relationship between the saving of households and the factors which determine it
average propensity to save
proportion of total income saved
S/Y
marginal propensity to save
proportion of a change in income that is saved
change in S / change in Y